The National Debt is rapidly approaching 20.4 trillion dollars which will amount to approximately $200,000.00 per taxpayer. Former Chairman of the Joint Chiefs of Staff GEN Martin Dempsey properly labeled our growing national debt as the number one national security crisis facing the nation because of its dangerous repercussions. This crisis falls on both Democrats and Republicans, neither of whom will stop writing checks knowing there is no money to fund the expenses. It also falls on multiple presidents (also of both parties), none of whom had the fortitude or leadership to forthrightly address this problem. We hear plenty about the debt during partisan elections with each party blaming the other as a basis to change control of Congress or the White House. Shamefully neither party actually cares. Even the Republican “Freedom Caucus,” allegedly singularly focused on reducing the debt, is more partisan and less effective in doing this. Effective immediately, both parties, the Congress, the White House, and the American people must focus on the issue to stop a national calamity. Remember Greece and other economic meltdowns? That is what we risk after years of failure and neglect by our leaders.
The national debt is like a person with runaway spending on a credit card. The person has no money but wants to continue to buy things. So long as the person makes the monthly minimum payments, the credit card company continues to extend credit. However, the underlying debt continues to increase. Thus, the monthly payment continues to increase. Eventually the person cannot make the monthly payments and must borrow even more money just to make the monthly payments, never touching the actual debt. This is where we are. The United States is borrowing money just to make our interest payments on the debt. Not only are we not paying off the debt at all, the debt continues to rise as we borrow more and more money just to keep pace with the rising interest payments. It is easy to see two things from this perilous trend. First, the more we spend on the debt, for which we have no choice, the less revenue there is to spend on all other priorities. Whether to you favor entitlements and health care spending, military spending, infrastructure spending, or anything else, it is all very much in jeopardy. The government has many responsibilities and requirements, but the looming crisis threatens all of it. Nobody wins, we all lose.
It is important to note that the national debt and the budget deficit, while related, are separate issues. Clearly, we must end annual budget deficits before we can ever hope to reduce the national debt. President Clinton eliminated annual deficits with a strong economy and bipartisan cooperation on taxes and budgets. George W. Bush, with bipartisan Congressional acquiescence, again ran up large deficits. While commencing two wars and not paying for them, neither President Bush nor Congress had the fortitude to ask the American people to forgo the tax cuts to pay for the wars. President Obama lowered annual budget deficits but without Republican willingness to cooperate on anything was not able to eliminate them. However, despite the façade of rising and falling annual budget deficits, Congress never reduced the national debt. More about taxes and budgets in a separate piece to devote the emphasis those issues merit.
China holds most of our debt along with other foreign powers, none of whom have our best interest at heart. As creditors, these nations have limited patience with growing U.S. budget irresponsibility. They can see the impending crisis and will not wait until it is too late to protect their investments. Focusing on China, over the past few decades they have committed numerous trade, economic, and other violations. Due to complex geopolitical challenges, multiple U.S. administrations have been unable or unwilling to address China’s ongoing transgressions. China continues to undermine the U.S. economy while collecting a dangerous level of U.S. debt, gaining incredible leverage over the U.S. Today, our indebtedness to China prevents us from challenging China or taking various forms of action to encourage China to play by accepted international rules governing trade and economics. This includes crucial issues such as stealing intellectual property, manipulating currency, unfair trade practices, and creating islands in international waters to make the South China Sea Chinese territorial water, thus threatening key international shipping lanes.
U.S. China policy aside, the biggest risk is to our nation and our economy. Obviously the higher the debt and the higher our payments, we reach a point where we simply are unable to meet our requirements and we reach a point where there are no more creditors willing to risk investing in our debt. U.S. Treasury bonds will become junk bonds. Some experts say we will reach this point by 2024. That leaves Congress and the President with little time to get the U.S. spiraling debt under control. We risk great economic hardship including high inflation, losing the dollar as the world economic standard (most likely replaced by China’s currency), increased foreign control of U.S. assets at even more reduced rates, the failure of entitlement programs such as Social Security, Medicare, Medicaid, the inability to meet national security obligations, a dramatically defunded military, and pension failures.
Years prior to declaring his candidacy for President, Donald Trump spoke publicly about the danger of China’s actions and the impact of our growing debt. He made sense because he offered strong insight without all the partisanship of the election and without the constraints of being in office and having to preside over U.S. policy. Many who did not support Trump in 2016 thought the silver lining of his election would be his understanding of these issues and potential to improve U.S. policy in this regard. Unfortunately, rather than confront the challenges as expected, he capitulated to China’s ongoing violations and appears more prone to increase the debt rather than reduce it. We need his alleged deal-making prowess to bring Congress together to address this looming crisis with unity of effort. Only a bipartisan approach will work no matter how much either party may control Congress. Any viable solution will involve sacrifice by the American people and for the people to support and accept that sacrifice, the nation will need to have a common understanding of the crisis. The time is now. We cannot wait.